United States Court of Appeals for the SECOND CIRCUIT
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Case: 11-1111 Document: 90-1 Page: 1 02/14/2013 845599 24 11-1111-cv Gatt Commc’ns, Inc. v. PMC Associates, L.L.C. United States Court of Appeals FOR THE SECOND CIRCUIT August Term, 2011 (Argued: February 6, 2012 Decided: February 14, 2013) Docket No. 11-1111-cv GATT COMMUNICATIONS, INC., Plaintiff-Appellant, –v.– PMC ASSOCIATES, L.L.C., DBA PMC ASSOCIATES, PMC ASSOCIATES, INC., DBA PMC ASSOCIATES, PHILLIP M. CASCIANO ASSOCIATES, INC., DBA PMC ASSOCIATES, PHILLIP M. CASCIANO, BRYAN CASCIANO, THOMAS WINELAND, VESEL RADIVIC, Defendants-Appellees, JOHN DOE, HENRY HOE, RICHARD ROE, Defendants. Before: WESLEY, CARNEY, Circuit Judges, and CEDARBAUM, District Judge.* Appeal from a final judgment of the United States District Court for the Southern District of New York (Deborah A. Batts, Judge), granting Defendants- Appellees’ motions to dismiss the amended complaint. We conclude that Plaintiff- Appellant Gatt Communications, Inc., lacks antitrust standing to bring its claims * The Honorable Miriam Goldman Cedarbaum, United States District Judge for the Southern District of New York, sitting by designation. Case: 11-1111 Document: 90-1 Page: 2 02/14/2013 845599 24 under the Sherman Act and the Donnelly Act. We also hold that Gatt’s common law claims were properly dismissed as a matter of law. AFFIRMED. KAREN F. NEUWIRTH, Law Office of Martin S. Rapaport, New York, New York, for Plaintiff-Appellant Gatt Communications, Inc. MICHAEL J. HAHN (Kristin A. Muir, on the brief), Lowenstein Sandler PC, New York, New York, for Defendants-Appellees Philip M. Casciano Associates, Inc. DBA PMC Associates, Philip Casciano, Bryan Casciano, and Vesel Ramovic.1 DANIEL E. LAYTIN, Kirkland & Ellis LLP, Chicago, Illinois (Jay P. Lefkowitz, Lauren O. Casazza, Kirkland & Ellis LLP, Jay B. Spievack, Kara L. Gorycki, Cohen Tauber Spievack & Wagner P.C., New York, New York, on the brief), for Defendant-Appellee Thomas Wineland. SUSAN L. CARNEY, Circuit Judge: This case involves an alleged bid-rigging scheme that sought to defraud various New York State and City government agencies in connection with the purchase by those agencies of a particular brand of mobile radio. Plaintiff-Appellant Gatt Communications, Inc. (“Gatt”), an admitted past participant in the purported scheme, seeks to recover damages from alleged co-conspirators for losses arising from the termination of Gatt’s at-will distribution contract for those radios. Gatt’s federal and state antitrust claims arise under the Sherman Act, 15 U.S.C. § 1, and the Donnelly Act, N.Y. Gen. Bus. Law § 340; its other claims sound in New York 1 In the text of our opinion, we use spellings of these defendants' names that appear from their filings to be correct. In the caption of our opinion, however, in accordance with Fed. R. App. P. 12(a), we use spellings that conform to those appearing in the title of the district court action. 2 Case: 11-1111 Document: 90-1 Page: 3 02/14/2013 845599 24 common law. The district court (Deborah A. Batts, Judge) dismissed the complaint for failure to state a claim. Gatt Commc’ns, Inc. v. PMC Assocs., L.L.C., No. 10 Civ. 8, 2011 WL 1044898 (S.D.N.Y. Mar. 10, 2011). We conclude that Gatt lacks antitrust standing to pursue its antitrust claims and that its common law claims were properly dismissed as a matter of law. We therefore AFFIRM the district court’s dismissal of Gatt’s complaint. BACKGROUND As alleged in Gatt’s amended complaint and the affidavit of Pietro Gattini, Gatt’s owner and president, the relevant facts are as follows.2 A. Factual Background Gatt buys, markets, and sells commercial land mobile radios in New York State. Vertex Standard USA, Inc. (“Vertex”), which is not a party to this action, manufactures and distributes the radios that are the subject of this dispute, and from 2005 through 2008, Defendant-Appellee Thomas Wineland worked for Vertex as its Vice President of Sales and Marketing. Defendant-Appellee PMC Associates, Inc. (“PMC”) is both a dealer of Vertex products and Vertex’s sales 2 Gatt submitted the affidavit of Pietro Gattini as an attachment to its opposition to defendants’ motions to dismiss. The affidavit largely mirrored the factual assertions presented in the amended complaint, but also contained additional allegations. The district court treated the affidavit as outside the pleadings and excluded it from consideration on the motions to dismiss. See Fed. R. Civ. P. 12(d). Gatt argues that the court erred by failing to consider the Gattini affidavit. We express no opinion about whether the district court should have considered the affidavit. Instead, we treat the allegations as if they had been included in a second amended complaint, and conclude for the reasons set forth in the text that even as so amplified, Gatt has failed to state a claim upon which relief can be granted. 3 Case: 11-1111 Document: 90-1 Page: 4 02/14/2013 845599 24 representative in New York State.3 In May 2002, Gatt and Vertex entered into an agreement (the “Dealer Agreement” or the “Agreement”) pursuant to which Gatt became a licensed dealer of Vertex radios and equipment. The Dealer Agreement was subject to termination by either party without cause on thirty days’ written notice.4 In connection with the Agreement, Vertex advised Gatt that PMC, as Vertex’s sales representative in New York, would orchestrate and support Gatt’s efforts to sell Vertex products. Vertex instructed Gatt to follow PMC’s directions and “to keep PMC closely informed of all of Gatt’s sales efforts and progress in contacting, cultivating, developing and . selling Vertex branded radios” to potential customers. Am. Compl. ¶¶ 36-37. Vertex explicitly warned Gatt that failure to cooperate with PMC could result in termination of the Dealer Agreement. Between 2002 and 2007, various New York City and State government agencies purchased significant quantities of Vertex radios for security and other communication purposes. These agencies often made their purchases by soliciting 3 Our references to “PMC” include, collectively, corporate defendants-appellees PMC Associates, Inc., PMC Associates, LLC, Philip M. Casciano Associates, Inc., and individual defendants-appellees Philip M. Casciano, Bryan Casciano, and Vesel Ramovic. Gatt alleges that Philip and Bryan Casciano are principals and senior officers of PMC and Vesel Ramovic is an employee of PMC. 4 Although the record does not contain the entire Dealer Agreement, Vertex’s October 22, 2007 notice of termination quotes language from the Dealer Agreement authorizing “without cause” termination by either party. Ex. 15 to Gattini Aff. Because the amended complaint refers to this termination letter, see Am. Compl. ¶ 139, we may consider the letter in reviewing the district court’s dismissal of this action, see Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000). The pertinent terms of the Dealer Agreement are undisputed: Gatt concedes that the Dealer Agreement authorized Vertex to terminate Gatt’s license at any time without cause. Appellant’s Br. at 24, 45. 4 Case: 11-1111 Document: 90-1 Page: 5 02/14/2013 845599 24 bids from Vertex dealers. In December 2006, PMC and New York State’s Procurement Services Group entered into a contract (the “New York Catalog Contract”) that “set the price at which any [New York government] agency could buy each particular Vertex radio model if such agency did not want to conduct a bidding process.” Am. Compl. ¶ 49-50. The New York Catalog Contract thus set a maximum price for Vertex products, but left state agencies free to solicit bids from Vertex dealers with the aim of securing a lower price. PMC, however, forbade Vertex dealers from selling to government agencies at prices below those listed in the New York Catalog Contract. At least six Vertex dealers in addition to Gatt and PMC had both Vertex’s contractual permission and the practical wherewithal to submit (and fulfill) bids in response to solicitations by local agencies. Gatt alleges that PMC and Wineland (acting for Vertex) orchestrated a “bid-rigging” or “bid rotation” scheme between at least 2005 and 2007. The plan called for PMC to determine in advance which Vertex dealer would submit the lowest (and, they reasonably expected, winning) bid for each government contract involving the purchase and sale of Vertex products. At PMC’s direction, the designated Vertex dealer would then submit a bid at a price set by PMC. The remaining dealers either would refrain from bidding or submit artificially inflated “dummy quotations” for the contract. The alleged scheme thus maintained the superficial appearance of a competitive bidding process, while ensuring the outcome desired by PMC and Vertex. If a Vertex dealer did not comply with the sham bidding process, however, PMC “could and would cause” Vertex to terminate that 5 Case: 11-1111 Document: 90-1 Page: 6 02/14/2013 845599 24 dealer’s license. Id. ¶ 53. Gatt alleges that Vertex knew that PMC was “organizing, arranging and orchestrating quotations” and “supported and encouraged such unlawful activity.” Id. ¶¶ 156. Gatt admits that it participated in the scheme at least from September 2005 to May 2007. On at least five occasions in that period, Gatt submitted artificially-inflated bids to various New York government agencies at PMC’s request, thereby helping to steer contracts to the predetermined bid-winning Vertex dealer, which—as it happened—was usually PMC itself. In addition, in April 2007, PMC convinced Gatt to refrain from bidding on a particular government contract by promising that once the contract had been awarded to PMC, PMC would hire Gatt as the principal subcontractor on the project. Gatt alleges that it went along with the scheme out of fear that its Vertex dealership license would otherwise be terminated.